It’s as good a time as ever to buy residential property, according to 70 per cent of Australian property investors.
A mid-May survey undertaken by the Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA) found that seven in 10 investors (or 72 per cent) are confident about the market’s short-term prospects.
It’s only 10 per cent less confidence than was reported after a similar survey from September last year.
The nationwide survey, which saw more than 1,850 investors respond, also found that four in five investors have not changed their investment intentions over the next six to 12 months, despite the economic impacts of COVID-19.
According to PIPA chairman Peter Koulizos, the survey has revealed an “overwhelmingly optimistic” sentiment held by Australian property investors.
“Nearly 60 per cent of respondents indicated that the pandemic had not made them change their investment plans over the next six months, with a further 18 per cent saying the crisis had actually made it more likely they would purchase a property over that time frame,” he commented.
Overall, “about 30 per cent of investors were more likely to buy a property in the next six to 12 months because of the pandemic”.
On the other end of the spectrum, just 5 per cent of respondents indicated they would be more likely to sell a property over the next six to 12 months.
Weighing in, PICA chairman Ben Kingsley said it’s more telling “that more than 30 per cent said they were less likely to sell over the same period because of the pandemic, with 63 per cent indicating no change at all to their plans”.
He added that most investors surveyed indicated they had the financial buffers to see them through the current economic uncertainty, with the results “definitively showing optimism among investors as well as a business as usual attitude”.
“Investors are confident about the times ahead, with many intending to purchase over the next year to take advantage of the burgeoning buyer’s market,” he observed.
The survey also revealed that just 20 per cent of tenants have been approaching their landlords with requests for rental relief.
Temporary rent reductions and rent deferrals have been the most common outcomes of such requests.
Of those tenants who have sought relief, only 15 per cent have been unable to provide the types of supporting evidence required by relevant temporary residential tenancy legislation.
Mr Kingsley said it was evident that landlords are working with tenants suffering genuine financial hardship during these difficult times, “with only a very small percentage not coming to a mutual agreement”.
“It’s also clear that a significant percentage of investors were suffering financial stress due to their own loss of employment or reduction of work hours, at 36 per cent of survey respondents, but were still able to meet their financial commitments.”
Almost three-quarters of property investors remain confident in the housing market’s short-term prospects despite the ongoing COVID-19 pandemic, a new survey has found.
A survey conducted by the Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA) in mid-May found that 72 per cent of investors remain confident about the market’s short-term prospects, believing that it is currently a good time to buy.
According to the survey, conducted on 1,877 investors across Australia in September last year, current investor sentiment is down 10 percentage points in the eight-month period.
However, the survey also found that the COVID-19 pandemic had not impacted the investment intentions of 80 per cent of the respondents over the next six to 12 months, with 30 per cent stating they were actually more inclined to buy in the COVID market.
PIPA chairman Peter Koulizos said the survey showed that investors were overwhelmingly optimistic about the property market over the next year.
“Nearly 60 per cent of respondents indicated that the pandemic had not made them change their investment plans over the next six months, with a further 18 per cent saying the crisis had actually made it more likely they would purchase a property over that time frame,” Mr Koulizos said.
“The survey results also showed about 30 per cent of investors were more likely to buy a property in the next six to 12 months because of the pandemic.”
PICA chairman and broker Ben Kingsley said only a small percentage of respondents (5 per cent) indicated the crisis had made it more likely that they would sell a property over the next six to 12 months.
“What’s more telling is that more than 30 per cent said they were less likely to sell over the same period because of the pandemic, with 63 per cent indicating no change at all to their plans,” Mr Kingsley said.
“Most investors also indicated that they had the financial buffers to see them through the current economic uncertainty.
Mr Kingsley stated that the survey results “definitively” show optimism in the investor space, as well as a “business as usual attitude”.
The survey results indicated that about 20 per cent of investors had their tenants request rental relief during the pandemic, with temporary rent reductions or rent deferrals being the most common outcomes.
The results also showed that about 15 per cent of all tenant rent requests were unable to provide supporting evidence as per the relevant temporary residential tenancies legislation.
“However, it’s clear from the survey that landlords worked with tenants who were suffering genuine financial hardship during these difficult times, with only a very small percentage not coming to a mutual agreement,” Mr Kingsley said.
“It’s also clear that a significant percentage of investors were suffering financial stress due to their own loss of employment or reduction of work hours, at 36 per cent of survey respondents, but were still able to meet their financial commitments.
Mr Kingsley concluded: “Investors are confident about the times ahead, with many intending to purchase over the next year to take advantage of the burgeoning buyer’s market.”
More than 70 per cent of property investors say it is a good time to buy residential property with the majority also believing it is business as usual, according to a joint industry survey.
The Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA) survey in mid-May found that 72 per cent of investors were confident about the market’s short-term prospects – down only 10 percentage points from an investor sentiment survey conducted in September last year.
The survey results, which attracted 1877 responses from across the nation, also found that the coronavirus crisis had not changed the investment intentions of 80 per cent of investors over the next six or 12 months.
PIPA Chairman Peter Koulizos said the survey showed that investors were overwhelmingly optimistic about the property market over the next year.
“Nearly 60 per cent of respondents indicated that the pandemic had not made them change their investment plans over the next six months, with a further 18 per cent saying the crisis had actually made it more likely they would purchase a property over that timeframe,” Mr Koulizos said.
“The survey results also showed about 30 per cent of investors were more likely to buy a property in the next six to 12 months because of the pandemic.
“It’s clear that record low interest rates as well as the resilient nature of property during turbulent times are inspiring investors to continue with their plans.”
While the survey found that 36 per cent of investors had experienced a loss of income, outside of rent, during the pandemic, the vast majority, at 91 per cent, had not applied to pause their mortgage repayments.
PICA Chairman Ben Kingsley said only a small percentage of respondents, or five per cent, indicated the crisis had made it more likely that they would sell a property over the next six to 12 months.
“What’s more telling is that more than 30 per cent said they were less likely to sell over the same period because of the pandemic, with 63 per cent indicating no change at all to their plans,” Mr Kingsley said.
“Most investors also indicated that they had the financial buffers to see them through the current economic uncertainty.
“The survey results definitively show optimism amongst investors as well as a business as usual attitude.”
The survey results indicated that about 20 per cent of tenants had asked for rental relief, with temporary rent reductions or rent deferrals being the most common outcomes.
The results also showed that about 15 per cent of all tenant rent requests were unable to provide supporting evidence as per the relevant temporary residential tenancies legislation.
“However, it’s clear from the survey that landlords worked with tenants who were suffering genuine financial hardship during these difficult times, with only a very small percentage not coming to a mutual agreement,” Mr Kingsley said.
“It’s also clear that a significant percentage of investors were suffering financial stress due to their own loss of employment or reduction of work hours, at 36 per cent of survey respondents, but were still able to meet their financial commitments.
“Investors are confident about the times ahead, with many intending to purchase over the next year to take advantage of the burgeoning buyer’s market.”
ENDS
For more information, or to organise an interview with Peter Koulizos or Ben Kingsley, please contact:
Bricks & Mortar Media | media@bricksandmortarmedia.com.au | 0405 801 979
About PIPA
The Property Investment Professionals of Australia (PIPA) is a not-for-profit association established by industry practitioners with the objective of representing and raising the professional standards of all operators involved within property investment.
The Property Investors Council of Australia (PICA) is a not-for-profit organisation committed to advocating and lobbying on behalf of property investors’ interests as well as education its members on the economic benefits and risks of property investing in Australia.
Although the full impact of Covid-19 is yet to hit the Australian property market, researchers predict the downturn won’t last long.
Once the economy gains momentum, the property market recovery should be swift, a trend often seen in the first five years after a recession according to the Property Investment Professionals of Australia.
PIPA chairman Peter Koulizos analysed data for seven consecutive years including the start of each recession or economic downturn from 1973 to the global financial crisis.
“In fact, looking back over the past nearly 50 years, house prices were higher five years after a recession or downturn each time,” Koulizos said.
“Some locations performed better than others, mostly likely due to local economic factors after each period.
“However, the research shows that talk of impending property ‘doom’ has never happened in recent history–and these recessions or downturns lasted multiple years rather than a few months.”
House prices following a financial crisis
Change in price after five years ending in
1980
1988
1996
2014
Sydney
100.7%
64.1%
16%
39.7%
Melbourne
37.6%
67.7%
3.1%
18.5%
Brisbane
49.7%
20.4%
23.3%
6.9%
Adelaide
37.7%
31.3%
5.9%
7.1%
Perth
64.7%
61.9%
27.3%
11.4%
Hobart
40.2%
51.8%
20.5%
1.7%
Darwin
NA
NA
47.3%
16.6%
Canberra
33%
20.2%
11.6%
8.3%
Source: PIPA
Koulizos said that over the three most recent economic downturns, there were periods of annual house price falls in many capital cities, but the price reductions were never sustained nor prolonged.
“An interesting point to that is that in 2011, every capital city recorded a fall in its house price index, which was simply when the GFC stimulus money ran out,” Koulizos said.
“This could well become a statistical reality this time around, too, but it’s important to recognise that within either one year or two years of that period, the house price index was showing solid growth once more.”
In 2010 the market was still recovering the global financial crisis but by the end of 2019 dwellings, prices and density had increased dramatically according Propertyology’s latest report.
Residential dwellings increased from 8.8 million to 10.4 million in the decade and 3.7 per cent of all residential dwellings approved were apartments or townhouses, compared to 31 per cent in the previous decade.
“Five out of eight capital cities had more apartments than houses approved during the decade–Canberra 70.9 per cent, Sydney 65.9 per cent, Melbourne 52 per cent, Darwin 51 per cent and Brisbane 50 per cent,” Propertyology head of research Simon Pressley said.
“From the start to the end of the decade, median house prices had increased from $530,00 to $972,000 in Sydney, they declined in Perth $494,000 to $489,000, they almost doubled in the regional township of Goulburn $230,000 to $427,000 and were very consistent in locations like Bendigo $235,000 to $360,000.”
However there was a significant drop in the volume of transactions despite an increase in supply and population growth.
“The 113,126 quarterly average volume of transactions in Australian real estate during the twenty-tens was notably lower than the 125,342 during the previous decade,” Pressley said.
The Propertyology researcher said they would have ordinarily expected a quarterly average in excess of 140,000 transactions however there was a steep decline in sales from the middle of the decade onwards.
“The sharp retraction is a direct result of Australia’s banking regulator [APRA] implementing a series of credit tightening policies,” Pressley said.
“Over time, the lower volumes of transactions for investment properties resulted in a general tightening in residential vacancy rates and rising rents in various parts of Australia.”
It’s not all doom and gloom in the property market, many million-dollar properties have sold since the COVID-19 restrictions began and property experts are predicting the market will hold steady.
According to the Property Investment Professionals of Australia (PIPA), most major property markets are well-placed to withstand the coronavirus crisis.
PIPA Chairman Peter Koulizos said the many financial support programs available would help to prevent any significant property price falls over the medium-term.
“Whenever there is a global financial shock, some commentators predict huge property price falls, which ultimately don’t happen,” Mr Koulizos said.
“During the GFC, prices were ‘forecast’ to fall by 30 per cent, but in many locations they held their ground and even strengthened over the months and years afterwards.
“While the coronavirus situation is somewhat different, given it’s a temporary public health emergency, I believe property prices may temporary soften by five to 10 per cent at most but rebound relatively quickly.”
Mr Koulizos said that most property markets were experiencing strong conditions before the pandemic, which would help to insulate them over coming months.
Compared to other economic downturns, existing low interest rates and inflation will also protect property markets, he said.
Property group Ray White says they have experienced a 19 per cent surge in buyers clicking on its networks’ sites.
Ray White Group Managing Director Dan White said the group as a whole “is selling more than we are listing”.
“Listings have dropped but buyer numbers haven’t. Life in isolation has seen a spike in online traffic from consumers interested in property, tips, agent advice and rentals,” Mr White said.
“Appraisals can be undertaken safely under Level 3 restrictions, and we have a range of safe ways for potential vendors to come to capitalise on the fact that there is little competition from other investment markets.
“We know people are looking and interest rates won’t get much cheaper.
This news was no surprise to Philip Kelly who owns Ray White Castle Hill. His team of 14 sales agents have exchanged on a record number properties in Castle Hill since March 31.
“The area has always been in high demand as it’s a big suburb and it has a good range of stock across estates and more established areas. We have everything from first home buyer stock to luxury homes plus a growing unit market,” he said.
“We’re putting our success down to our virtual auctions. We started planning on going virtual at least three weeks before the Prime Minister banned social gatherings and auctions, so we were ready.”
In fact, Ray White Castle Hill sold 69 Chepstow Drive, Castle Hill for $1.310 million in a super short five day auction campaign three weeks ago on March 31.
“There were four registrations and we sold under the hammer as one of the first online auctions. I actually think the online auctions are here to stay,” Mr Kelly said.
“We had another example at Cherrybrook where not 30 minutes before the auction a bidder was keen to register but would not have made the drive time to get to an on-site but as it was online, it was totally fine.”
“As buyers are not spending their Saturdays on the road attending open homes, benefiting from virtual tours and video streaming, their criteria is also changing as a result of working remotely. Consequently there is a measurable shift as social drivers are changing their requirements.”
McGrath also recorded some outstanding sales throughout its network.
Alex Jordan of McGrath Paddington (QLD) has transacted eight prestige properties since the COVID-19 restrictions.
Mr. Jordan explained: “While the market is slower than usual, there are several reasons why people continue to transact. People want to take advantage of the low-interest rates where the buying power is far greater than it has been for a long time.
“Most of my clients are buying for lifestyle and family reasons and in most cases are upgraders buying and selling in the same market.
Western Advocate, Bathurst, Page 14, 21 May 2020
Central Western Daily, Orange, Page 13, 21 May 2020
